Houston investor: Is this the golden age for B2B software?

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This Houston venture capital leader is looking at how 2020 — for all its disappointments — might be a great year for B2B software-as-a-service companies. Getty Images

B2B software as a service, or SaaS, founders entered 2020 riding a wave of the longest economic expansion in United States history. Valuations increased to new highs, funding rounds continued getting larger at each stage, and forecasts went up and to the right fast. But then, March hit.

Quickly and seemingly out of nowhere, headlines became dominated by apocalyptic predictions of death, record levels of unemployment, shocking economic forecasts of GDP contraction, historic mass layoffs and furloughs, and unprecedented multi-trillion dollar economic stimulus packages. For founders every instinct began screaming to cut costs and hunker down.

But should B2B SaaS founders cut their organizations right now? Through analyzing a few key events and looking to the evidence in the market today, founders can develop a strategy for growing during this crisis. Not only is growth cheaper for most B2B SaaS against the backdrop of economic meltdown, but with the majority following a hunker-down instinct, a growing B2B SaaS firm will compare very favorably against a landscape of stale and stagnant competitors.

Reviewing the 1918 Spanish Flu Pandemic and the 2008 downturn

While the health implications vary widely between the current pandemic and the 1918 flu epidemic, the economic reactions share many similarities. The US response to 1918 was just as fractured as the states' reactions to COVID have been this year. As cities and states in 1918 shut down commerce to stem the spread of the flu, economic contraction quickly gave way to rebound, the so called "V-shaped recovery," despite the Spanish Flu having much higher death rates among working individuals than COVID-19.

There are major differences between 1918 and 2020, however. First, there is untapped potential in technology to replace workers. As businesses look for ways to cut costs, expect them to aggressively turn to automation, ultimately depressing real wages. Second, the 1918 response did not include shutdown measures as draconian as those we are experiencing in 2020. This could lead to permanent output loss across a wide range of industries, increasing real prices just as real wages decline. And third, the trillions of dollars in federal economic relief are unlike anything attempted in 1918.

The 2008 downturn that nearly brought the financial sector to a halt rippled through the economy as businesses in a wide range of industries made steep cuts to operations and capital expenditures. Despite this dangerous environment, SaaS firms increased profitability and continued to grow revenues each quarter. Growth slowed but remained positive while most other companies experienced absolute declines in revenue.

Customer acquisition for SaaS businesses usually gets more efficient during downturns, driving the potential for faster growth. The performance of all publicly traded B2B SaaS firms during 2008 illustrated in Figure 1 above proves the resilience of this category during a recession. While revenue continued to grow, profitability rose from a 10 percent loss on average to a 5 percent gain on average by 2010. This is likely due to firms freezing salaries and hiring and perhaps cutting down the sales and marketing budgets.

Downturn case study: Salesforce

Salesforce entered the downturn as a category leader in B2B SaaS with nearly $500M in revenue in 2007 and $3.5 million in operating losses. Throughout 2008, the company grew revenues by 51 percent to $748 million and operating profit surged to $20.3 million. And in 2009, the company repeated this stellar performance by growing revenues 44 percent to $1,077M and operating profit to $63 million. These results occurred against the backdrop of a global financial downturn and with a product focused on helping people sell more effectively (not something one would expect would sell well during a free-fall recession).

The revenue growth throughout those years followed the growth in sales and marketing spend. In 2008, the company grew sales and marketing by 49 percent, driving 51 percent revenue growth at about $1.50 of sales expense per $1 of recognized revenue added. In 2009, the company grew sales and marketing 42 percent resulting in 44 percent revenue growth at $1.63 of sales expense per $1 of recognized revenue. By 2010, the sales growth advantage was gone and Salesforce not only dropped its expense growth rate but also reverted to spending $2.64 per $1 of new revenue added.


Looking at these results Salesforce executed on the growth opportunities in 2008 and 2009 by ramping up sales expenses. The relative cost to acquire customers in 2008 and 2009 compared to 2010 proved significantly cheaper (approximately 40 percent less expensive). When faced with an advantage like that, every founder should charge ahead.

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Dougal Cameron is director of Houston-based Golden Section Venture Capital.

GOOSE has invested in a logistics automation startup that has just emerged from stealth-mode operations. Photo courtesy of Outrider

Houston investor group backs growing logistics automation startup emerging from stealth

Money moves

A Golden, Colorado-based logistics technology startup has emerged from stealth-mode operation aft two years of development to collect its recent $53 million investment that a Houston investor group contributed to.

Houston-based GOOSE has announced its participation in Outrider's recent raise, which included both a seed and series A round. The startup has created an autonomous yard operations tool for logistics purposes. The company also received investment from the likes of NEA, 8VC, Koch Disruptive Technologies, Fraser McCombs Capital, Prologis, Inc., Schematic Ventures, Loup Ventures, and more, according to a news release.

The goal of distribution yards is to keep semi-trailers full of freight moving quickly in the space between the warehouse doors and public roads. However, many of the processes that make up yard operations are manual, inefficient, and hazardous.

The current situation in logistics hubs is not optimized, and yard operations are ineffective and even hazardous.

"Logistics yards offer a confined, private-property environment and a set of discrete, repetitive tasks that make the ideal use case for autonomous technology," says Andrew Smith, founder and CEO of Outrider, in the release. "But today's yards are also complex, often chaotic settings, with lots of work that's performed manually. This is why an overarching systems approach – with an autonomous truck at its center – is key to automating every major operation in the yard."

Outrider's technology can automate repetitive and manual tasks, like moving trailers around, hitching and unhitching them, connecting and disconnecting trailer brake lines, and monitoring trailer locations, per the release.

"Outrider represents the type of company we at GOOSE want to fund," says Samantha Lewis, director of GOOSE, in a news release. "It is innovative, disruptive, and led by an all-star CEO that has a proven track record in recruiting top talent and top tier investors. GOOSE has been with Andrew from the beginning of his entrepreneurial pursuits and, still, he continues to impress us everyday."

Outrider, which has 75 employees — including 50 engineers focused on the automation technology — has launched pilots with Georgia-Pacific and four Fortune 200 companies. Smith says his relationship with GOOSE has had a positive effect on his career and his startup.

"The experience of GOOSE membership is unmatched. GOOSE, it's founder Jack Gill, and initial members, Art Ciocca and Rod Canion, played major roles in my entrepreneurial career by funding my first successful clean startup and then becoming seed investors in Outrider," says Smith in the release. "I am fortunate to have the team at GOOSE by our side again as we officially emerge from stealth and continue to scale the business."

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Houston founders launch edtech startup, pilot to pinpoint why students are struggling

learning gaps

Early detection. It sounds simple enough: identify a problem before it has the chance to become a bigger one.

But in practice, early detection is much more difficult to navigate, especially in education, when it comes to identifying the reasons behind a student's academic struggles.

That’s why co-founders Alapati “Al” Ware and Estela Montanez launched Progress Report, a Houston-built K-12 learning-intelligence platform designed to go beyond identifying that a student is struggling.

The platform recently began its pilot program with 35 educators and more than 200 students in Texas and Arizona.

“It’s a micro-learning school that works with children with disabilities, primarily dyslexia and nonverbal students,” Ware tells InnovationMap.

The platform is also being used by homeschool parents, home teachers and Houston educators, including those at SWPS College & Career Preparatory Academy, a Houston charter school.

Ware says Progress Report was designed to fill a gap he and Montanez saw in existing edtech. Some platforms cater almost entirely to students, leaving teachers with little insight into if and how a child is learning. Others focus heavily on district data, where “the student is just a number,” leaving teachers to navigate disconnected tools.

“Our goal was [to] focus purely on the teacher because the teacher is the backbone,” Ware says.

Progress Report traces student performance to learning gaps and prerequisite skills, helping educators understand not only where a student is struggling, but what may be causing it.

The platform then helps teachers build individualized instruction for general education students, students with special education and Individualized Education Program (IEP) needs, and Spanish-speaking learners—all within one educator-controlled system.

The goal is to reduce the guesswork and hours of manual work educators can spend developing individualized lesson plans.

Progress Report helps idenitify learning gaps and common roadblocks for each student. Image courtesy Progress Report

For Ware and Montanez, the mission is also personal.

The concept dates back to around 2023, when the co-founders first had to navigate and address their children’s educational needs.

Ware, Progress Report’s CEO and CTO with a background in edtech, built the platform end-to-end after watching his daughter, who had an IEP related to speech, struggle to get the support she needed.

Montanez, the company’s COO, brought another perspective. Her son is on the autism spectrum. She now leads Progress Report’s operations, partnerships and pilot execution while helping carry its focus on bilingual families from Puerto Rico to Houston.

Together, they began researching ways to personalize their children’s learning and help them progress academically. Montanez’s son went on to become an AP student and high school athlete, while Ware’s daughter began reading more than two grade levels above her grade, they tell InnovationMap.

But Progress Report isn’t designed simply to give a struggling student more work.

Take a student who appears to have difficulty with math.

The problem may not actually be math, the founders share. The student could understand the calculations but struggle to comprehend complex words used in a math problem.

Progress Report is designed to trace those performance patterns back to learning gaps, prerequisite skills or other instructional barriers. From there, it can recommend a next instructional step while leaving the educator in control.

The same concept applies to accommodations.

The system can read IEPs, 504 Plans, Present Levels of Academic Achievement and Functional Performance (PLAAFPs), evaluations and other special education records. Approved IEP goals can then be mapped into the student’s learning graph, while accommodations can carry over into lesson planning and question delivery.

The founders say that approach separates Progress Report from simply adding another artificial intelligence chatbot to a classroom. And still, they believe teachers have to remain at the center.

Teachers, in fact, helped build Progress Report.

The founders began meeting with Houston-area educators months before the pilot. Their feedback helped shape the platform before testing began.

“We’ve been building alongside these educators,” Ware says.

Parents are another piece.

Progress Report can give parents access to their child’s learning record so they can see learning gaps as they develop. Teachers can also see information on work being completed at home when the parent and educator are working together.

After the pilot wraps, Ware and Montanez plan to introduce a $29.99 monthly subscription for homeschool parents, teachers and other educators. They say the price was intentionally kept relatively low to help make the tools more accessible.

They are also exploring ways to work with organizations that could help families who can’t afford the platform.

Moving forward, the goal is considerably bigger.

Over the next five years, Ware and Montanez want Progress Report to become what they describe as a “gold standard” in every state. They know getting there will require building relationships with educators, technology leaders, policymakers and school board members.

For now, they’re starting with a few hundred students and a question that sounds simple but can be remarkably difficult to answer: Why is this student struggling?

If Progress Report works the way its founders envision, teachers and parents will have a clearer answer.

Pioneering cohousing development opens in Houston's historic 2nd Ward

Housing in Hou

An experimental, multi-generational building in the East End is now open and accepting residents. Only 10 of the 33 units remain available at East End Commons, the first project from CoHousing Houston.

Located at 115 Lenox, East End Commons was first conceived in 2017 and is designed to combine the security of home ownership with the community aspect of apartment life, essentially a condominium but with added focus on bringing neighbors together.

Units range from 900-2,000 square feet, offering ample private home space, but with a large Common House area and central courtyard for gatherings, working, and interaction. Large front porches encourage people to spend time outside where they can meet their neighbors, as do extensive foot paths for casual meetings.

"At East End Commons, you know your neighbors before you move in — so you have a network of people and spaces that are immediately there for you," said founding resident Kelli Soika. "We designed for larger shared spaces versus larger personal spaces in order to foster the breakdown of the barriers that lead to loneliness."

Combating loneliness and isolation is certainly necessary. A 2025 survey conducted by the American Psychological Association shows that most Americans feel a sense of societal division and lonely. A loss of "third spaces," where people gather outside the home or work, is a prime factor. East End Commons aims to alleviate some of that disconnectedness.

"I wanted to live in a neighborhood that is imbued with a sense of community above the individual, like we have all experienced in Houston during times of disaster recovery," said Lynn Morstead, one of East End Commons‘ founding residents. "In those instances, such as Hurricane Harvey, we surface from our separateness and come together in new and unexpected ways. With East End Commons, the goal is to translate that notion beyond a set period of time and make it a fixture of everyday life. I call it 'disaster-free neighborliness.'"

East End Commons was designed by Kathleen English of English + Associates. Sustainability is part of the project's design, with amenities such as geothermal heating and cooling exchange HVAC, pre-heated water systems, low-energy use air conditioning and heating, and native landscaping.

Prices for units range from $300,000 to the $900,000s, which can be more than double the home price in the rapidly gentrifying East End. HOA fees not only help maintain communal areas, they also cover shared internet, water, and other communal expenses. Similarly, government of the building is handled democratically via a community board that aims to make decisions by building consensus.

For more information, email info@cohousinghouston.com or call 832-900-2919.

MD Anderson president to retire after nine years, interim successor named

retirement plan

An era is ending at The University of Texas MD Anderson Cancer Center.

On Aug. 26, Dr. Peter WT Pisters announced his plans to retire from his role as president of the comprehensive cancer center. He will work on a smooth transition of leadership with interim president Dr. Jeffrey E. Lee throughout September.

“I first arrived at UT MD Anderson 32 years ago with a passion for doing everything I could to advance our mission to end cancer. Serving as the only faculty member to become president, and now marking nine years in the role, I can say with great pride and gratitude that there is no better place than UT MD Anderson to turn hope into healing for patients and families everywhere,” Pisters said in a news release. “With a timeless strategy, a strong leadership team, unprecedented levels of financial health, and a priceless culture anchored in our deeply held Core Values, now is the right time for me to transition to other opportunities. UT MD Anderson has never been stronger, and its future has never been brighter.”

Pisters assumed the presidency in 2017 and helped launch some of the most cutting-edge new clinics in MD Anderson history. One of those was the James P. Allison Institute, named for the Nobel Laureate scientist who discovered a way to suppress immune response on tumors so that immune cells would attack cancer cells instead. As head of his titular clinic, Allison pioneered several new immunotherapies against cancer.

Pisters also oversaw the creation of the Institute for Data Science in Oncology in 2024, an innovative consortium of scientists dedicated to enhancing single-cell imaging to improve precision in cancer treatments. The institute also brought together teams to use data-driven analytics regarding safety, quality and access.

The UT System Board of Regents praised the leadership and work of Pisters in a statement, wishing him well in the next phase of his career.

“The Board of Regents and I are profoundly grateful to Dr. Pisters for his exceptional presidency over the past nine years and for thoughtfully concluding his service when UT MD Anderson is thriving at its best position of peak performance, strength and impact. We wish him our very best with his retirement and in his next chapter,” Kevin P. Eltife, chairman of the UT System Board of Regents, added in the release.

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